Most of the style guides advise you to employ block quotation for any direct quote longer than four lines (MLA). But this is generally for essays and such. Does this also apply for fiction, if the character reads a lengthy quote from an actual book (opposed to a fictional one within the fictional story, if that makes sense)? In other words, let's say a character quotes a six line paragraph from Walden; do you have to use the block quotation for that? And please just assume the quote needs to be there. I just want to know what the rule is. Thank you.
The rule is to make things clear to your readers. If you're planning to self-publish, ask a few reader friends if they understand what's going on with whatever format you use. If you're planning to go through a publisher, make your MS clear and they'll change it to house-style anyway.
Yep. There is no "rule" on this, at least if you review how it is handled in published fiction. I've seen it both ways, but it seems to me the lack of block quotes is far more common.